First Time Buyer Activity Increases

Date Published 30 May 2013

First-time buyer activity remained strong in March with the number of first-time buyers increasing by 20% according to data published by the Council of Mortgage Lenders.

This increase, as well as small rise in the number of home movers, contributed to a monthly jump in house purchase lending. Remortgage lending also increased compared to February but remained flat over the first quarter.

A total of 19,100 loans (worth £2.4billion) were advanced to first-time buyers in March, up from 15,900 loans in February but down on the 24,400 loans advanced in March last year. However, March 2012 marked the end of the first-time buyer stamp duty holiday and resulted in a significant jump in activity, making meaningful year-on-year comparisons difficult.

While the loan-to-value ratio for first-time buyers remained at 80%, there has been a gradual increase in the proportion of first-time buyers taking out loans with a deposit of 10% or less. In the first quarter of the year 1 in 4 first-time buyers put down a deposit at 10% or less – up from 1 in 5 in the first quarter of last year. First-time buyers also typically borrowed a slightly larger amount in March than in February, both in absolute terms and relative to their income.

First-time buyers also continued to account for an increasing proportion of all house purchase loans – increasing to 45% in March from 43% in February.

A total of 42,000 house purchase loans were advanced in March (worth £6.2billion) marking a 15% rise on February lending. As expected, house purchase lending in March was down (19%) on March 2012 but this was again due to distortions around the end of the stamp duty concession in March 2012.

CML Director General Paul Smee said: 'First-time buyer activity in the first quarter was nearly at the same level as last year – when figures were buoyed up by the end of the stamp duty holiday. This suggests that the market continues to be favourable for those looking to buy their first home.

'More borrowers are taking out higher loan-to-value mortgages than any other time in the last four years – a sign that lenders are open for business, and that borrowers, even those without a large deposit, are increasingly able to get a foot on the property ladder.'